<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission file number 0-17162
---------------
KEY PRODUCTION COMPANY, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 84-1089744
- -------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
Suite 3300
707 Seventeenth Street, Denver, Colorado 80202-3404
- ------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, Including Area Code (303) 295-3995
---------------
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO______
------
The number of shares of Key Production Company, Inc. common stock, $.25 par
value, outstanding as of June 30, 1997, is 11,477,497.
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
ITEM 1 - FINANCIAL STATEMENTS
- -----------------------------
KEY PRODUCTION COMPANY, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
--------------------- -----------------------
<S> <C> <C> <C> <C>
(In thousands, except per share data) 1997 1996 1997 1996
-------- --------- --------- ---------
REVENUES:
Oil and gas production revenues $ 9,421 $ 10,127 $ 20,460 $ 16,008
Other revenues 95 82 166 82
-------- --------- --------- ---------
9,516 10,209 20,626 16,090
-------- --------- --------- ---------
OPERATING EXPENSES:
Depreciation, depletion and
amortization 2,884 3,633 6,038 5,959
Operating costs 2,529 2,634 5,282 4,217
Administrative, selling and other 695 672 1,104 1,063
Financing costs:
Interest expense 132 215 321 326
Interest income (19) (19) (43) (24)
-------- --------- --------- ---------
6,221 7,135 12,702 11,541
-------- --------- --------- ---------
INCOME BEFORE INCOME TAXES 3,295 3,074 7,924 4,549
PROVISION FOR INCOME TAXES 1,252 1,168 3,011 1,729
-------- --------- --------- ---------
NET INCOME $ 2,043 $ 1,906 $ 4,913 $ 2,820
======== ========= ========= =========
NET INCOME PER COMMON AND COMMON
EQUIVALENT SHARE $ .17 $ .16 $ .40 $ .26
======== ========= ========= =========
WEIGHTED AVERAGE COMMON AND COMMON
EQUIVALENT SHARES OUTSTANDING 12,138 12,265 12,159 10,858
======== ========= ========= =========
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-2-
<PAGE>
KEY PRODUCTION COMPANY, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
---------------------
(In thousands) 1997 1996
--------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,913 $ 2,820
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, depletion and amortization 6,038 5,959
Deferred income taxes 2,694 1,547
Changes in operating assets and liabilities:
(Increase) decrease in receivables 2,617 (1,337)
Increase in prepaid expenses and other (497) (323)
Increase (decrease) in accounts payable and
accrued expenses 2,602 (297)
Decrease in long-term property liabilities and
other (283) -
--------- ---------
Net cash provided by operating activities 18,084 8,369
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Oil and gas exploration and development
expenditures (13,430) (7,791)
Acquisition of oil and gas properties (3,827) (429)
Cash received in connection with acquisition,
net of cash purchase adjustments - 2,433
Proceeds from sale of oil and gas properties 318 23
Other capital expenditures (449) (136)
--------- ---------
Net cash used by investing activities (17,388) (5,900)
--------- ---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Long-term borrowings 6,000 10,104
Payments on long-term debt (4,500) (11,500)
Proceeds from issuance of common stock 50 10
Payments to acquire treasury stock (408) -
--------- ---------
Net cash provided (used) by financing activities
activities 1,142 (1,386)
--------- ---------
NET INCREASE IN CASH AND CASH EQUIVALENTS 1,838 1,083
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR 1,581 591
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 3,419 $ 1,674
========= =========
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-3-
<PAGE>
KEY PRODUCTION COMPANY, INC.
CONSOLIDATED BALANCE SHEET
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands) 1997 1996
------------ -------------
(Unaudited)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 3,419 $ 1,581
Receivables 6,006 8,623
Prepaid expenses and other 1,371 874
------------ -------------
10,796 11,078
------------ -------------
OIL AND GAS PROPERTIES, ON THE BASIS OF FULL
COST ACCOUNTING:
Proved properties 114,662 102,487
Unproved properties and properties under
development, not being amortized 16,037 10,685
------------ -------------
130,699 113,172
Less - accumulated depreciation,
depletion and amortization (34,881) (28,941)
------------ -------------
95,818 84,231
------------ -------------
OTHER ASSETS, NET 1,103 631
------------ -------------
$ 107,717 $ 95,940
============ =============
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 6,873 $ 4,405
Accrued exploration and development 1,440 852
Accrued lease operating expense and other 778 761
------------ -------------
9,091 6,018
------------ -------------
LONG-TERM DEBT 24,000 22,500
------------ -------------
NONCURRENT LIABILITIES
Deferred income taxes 12,623 9,929
Long-term property liabilities and other 2,062 2,224
------------ -------------
14,685 12,153
------------ -------------
STOCKHOLDERS' EQUITY:
Common stock, $.25 par value, 50,000,000
shares authorized, 11,771,690 and
11,713,584 shares issued, respectively 2,943 2,928
Paid-in capital 37,346 37,245
Retained earnings 22,382 17,469
Treasury stock at cost, 294,193 and
259,093 shares, respectively (2,730) (2,373)
------------ -------------
59,941 55,269
------------ -------------
$ 107,717 $ 95,940
============ =============
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-4-
<PAGE>
KEY PRODUCTION COMPANY, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
TOTAL
STOCK-
COMMON PAID-IN RETAINED TREASURY HOLDERS'
STOCK CAPITAL EARNINGS STOCK EQUITY
--------- --------- --------- --------- ---------
<S> <C> <C> <C> <C> <C>
(In thousands, except per share data)
BALANCE, DECEMBER 31, 1996 $ 2,928 $ 37,245 $ 17,469 $ (2,373) $ 55,269
Net income - - 4,913 - 4,913
Common stock issued 15 94 - - 109
Treasury stock issued - 7 - 51 58
Treasury stock purchased - - - (408) (408)
--------- --------- --------- ---------- ---------
BALANCE, JUNE 30, 1997 $ 2,943 $ 37,346 $ 22,382 $ (2,730) $ 59,941
========= ========= ========= ========= =========
</TABLE>
The accompanying notes to financial statements are
an integral part of this statement.
-5-
<PAGE>
KEY PRODUCTION COMPANY, INC.
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
The financial statements included herein have been prepared by Key
Production Company, Inc. ("Key" or the "Company"), without audit, pursuant to
the rules and regulations of the Securities and Exchange Commission, and reflect
all adjustments which are, in the opinion of management, necessary to a fair
statement of the results for the interim periods, on a basis consistent with the
annual audited statements. All such adjustments are of a normal, recurring
nature except as disclosed herein. Certain information, accounting policies, and
footnote disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been omitted
pursuant to such rules and regulations, although the Company believes that the
disclosures are adequate to make the information presented not misleading. These
financial statements should be read in conjunction with the financial statements
and summary of significant accounting policies and notes thereto included in the
Company's latest annual report on Form 10-K.
BASIS OF PRESENTATION
Key consummated the acquisition of Brock Exploration Corporation (Brock) on
March 28, 1996 in a tax-free reorganization pursuant to which Brock became a
wholly-owned subsidiary of Key. To effect the transaction, each Brock
shareholder received one share of Key common stock for each 1.45 Brock shares
held. The accompanying financial statements include the accounts of Key for 1997
and 1996 and the accounts of Brock for periods subsequent to the acquisition.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
INCOME TAXES
Income tax expense consisted of the following:
<TABLE>
<CAPTION>
Six Months Ended June 30,
-------------------------
1997 1996
----------- ----------
<S> <C> <C>
Current Taxes:
Federal $ - $ -
State 317 182
Deferred Taxes: 2,694 1,547
----------- ----------
$ 3,011 $ 1,729
=========== ==========
</TABLE>
-6-
<PAGE>
NET INCOME PER SHARE
Net income per share amounts are based on the weighted average number of
common shares outstanding for each period. When dilutive, outstanding options to
purchase common stock are included as share equivalents using the treasury stock
method. Only one per share figure is presented for each period because the fully
diluted and primary earnings per share amounts are not materially different.
The Company will adopt Financial Accounting Standards No. 128, "Earnings
per Share," on December 15, 1997. The new standard replaces "primary earnings
per share" with "basic earnings per share" and redefines "diluted earnings per
share." On a pro forma basis, the Company would report the following per share
results.
<TABLE>
<CAPTION>
For the Three Months For the Six Months
Ended June 30, Ended June 30,
-------------------- --------------------
1997 1996 1997 1996
--------- ------- -------- ---------
<S> <C> <C> <C> <C>
Basic earnings per
common share $ .18 $ .16 $ .43 $ .26
Diluted earnings per
common share $ .17 $ .16 $ .40 $ .26
</TABLE>
STATEMENT OF CASH FLOWS
The Company considers all highly liquid debt instruments purchased with an
original maturity of three months or less to be cash equivalents. These
investments earned 5.6 percent and 5.5 percent rates of interest at June 30,
1997 and December 31, 1996, respectively, with cost approximating market.
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
For the Six Months
Ended June 30,
------------------
1997 1996
------- -------
(In thousands)
<S> <C> <C>
Cash paid during the period for:
Interest (net of amounts capitalized) $ 601 $ 295
Income taxes (net of refunds received) $ 106 $ 156
</TABLE>
-7-
<PAGE>
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
In connection with the Brock acquisition, the Company received cash and
cash equivalents totaling $2,098,000. In addition to the cash impact, the
acquisition had the following non-cash impact on the Company's December 31,
1996 balance sheet:
<TABLE>
<CAPTION>
Amount
------
(in thousands)
<S> <C>
Current assets $ 1,383
Oil and gas properties 21,346
-------
$ 22,729
=======
Current liabilities $ 1,099
Long-term debt 7,950
Non-current liabilities 1,909
Stockholders' equity 13,869
-------
$ 24,827
=======
</TABLE>
PRO FORMA FINANCIAL INFORMATION
Key consummated the acquisition of Brock Exploration Corporation (Brock) on
March 28, 1996 in a tax-free reorganization pursuant to which Brock became a
wholly-owned subsidiary of Key. To effect the transaction, each Brock
shareholder received one share of Key common stock for each 1.45 Brock shares
held.
The following unaudited pro forma information was prepared as if the Brock
acquisition occurred on January 1, 1996. The pro forma data presented is based
on numerous assumptions and is not necessarily indicative of future operations.
<TABLE>
<CAPTION>
Six Months Ended
June 30, 1996
----------------
(In thousands, except
per share data)
<S> <C>
Revenues $18,595
Net income $ 3,361
Net income per share $ .28
</TABLE>
-8-
<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL RESULTS
Key is reporting second quarter 1997 net income of $2.0 million. This
represents a 7 percent increase over the $1.9 million reported for the same
quarter of 1996. Net income per share of $.17 per share is up 6 percent from the
$.16 per share reported a year ago. Second quarter results for 1997 and 1996 are
based on revenues of $9.5 million and $10.2 million, respectively.
On a year to date basis, Key is reporting a 74 percent increase in net
income, and a 54 percent increase in net income per share. Net income for the
six month periods was $4.9 million and $2.8 million for 1997 and 1996,
respectively.
RESULTS OF OPERATIONS
<TABLE>
<CAPTION>
For the Quarter For the Six Months
Ended June 30, Ended June 30,
------------------- -------------------
1997 1996 1997 1996
------ ------ ------- -------
Selected Oil and Gas
Operating Statistics
- --------------------
<S> <C> <C> <C> <C>
Gas Volume - Mcf per day 29,550 30,152 28,962 23,596
Gas Price - Per Mcf $ 2.00 $ 1.91 $ 2.32 $ 1.97
Oil Volume - Barrels per day 2,366 2,651 2,298 2,143
Oil Price - Per barrel $ 17.65 $ 19.81 $ 18.98 $ 18.85
Full Cost Amortization Rate 30.0% 35.5% 29.0% 36.7%
</TABLE>
Oil and gas revenues for the second quarter of 1997 were down 7 percent
from the previous year.The slight decline is the result of lower oil sales. Oil
and gas revenues for the six month periods increased by 28 percent between 1997
and 1996. The year to date increase is due to the acquisition of Brock at the
end of the first quarter in 1996 as well as production from new drilling.
Oil sales for the current quarter of $3.8 million reflect a 20 percent
decrease from the $4.8 million reported for the same quarter a year ago.
Decreases to oil production and price declines both contributed to the drop in
oil revenues. Daily oil production went from 2,651 barrels per day in 1996 to
2,366 per day in 1997. Key's average daily price slipped from $19.81 per barrel
in 1996 to $17.65 per barrel in 1997.
Oil sales for the first six months of 1997 are 7 percent ahead of 1996 six
month results. Most of the increase, $.5 million, is due to an increase in oil
production. Daily production increased from 2,143 barrels per day in 1996 to
2,298 barrels per day in 1997. Average oil prices for the six month periods
increased slightly from $18.85 per barrel in 1996 to $18.98 per barrel in 1997.
Gas sales for the second quarter of 1997 increased to $5.4 million. A 5
percent increase to Key's average gas price more than offset a 2 percent
decrease in gas production. Key's average price for the second quarter climbed
from $1.91 per Mcf in 1996 to $2.00 per Mcf in 1997. Average daily production
fell from 30,152 Mcf per day in 1996 to 29,550 Mcf per day in 1997.
-9-
<PAGE>
Gas sales for the six month period increased by 44 percent between 1996 and
1997. Daily production increased from 23,596 Mcf per day in 1996 to 28,962 Mcf
per day in 1997. Production increases contributed approximately $1.9 million to
gas sales. Key's average price increased from $1.97 per Mcf in 1996 to $2.32 per
Mcf in 1997, for an additional $1.8 million in sales.
Product sales from gas processing plants for the second quarter and first
six months increased 110 percent and 87 percent, respectively, but did not
contribute a significant amount to oil and gas revenues. Key's second quarter
oil and gas revenues are derived from the following product mix: 40 percent oil,
57 percent gas and 3 percent plant products. This compares to the following mix
for 1996: 47 percent oil, 52 percent gas and 1 percent plant products.
Other revenue for the second quarters and first six months of 1997 and 1996
is primarily income derived from a pipeline acquired in the 1996 Brock
acquisition.
Depreciation, depletion and amortization (DD&A) expense decreased 21
percent between the second quarters of 1997 and 1996. Most of the decrease is
based on a reduction in the DD&A rate, and to a smaller extent a decrease in oil
and gas sales. The quarterly depletion rate as a percentage of oil and gas sales
went from 35.5 percent in 1996 to 30.0 percent in 1997 .
DD&A expense for the six months increased by 1 percent between 1997 and
1996. The expense increase is the result of a 28 percent increase to oil and gas
sales which was offset by a decrease in the DD&A rate. The six month depletion
rate as a percentage of oil and gas sales dropped from 36.7 percent in 1996 to
29.0 percent in 1997. Improved product prices and increased reserves were the
catalyst for improved DD&A rates in 1997. Also included in DD&A expense is a
relatively immaterial amount of depreciation on fixed assets and amortization of
financing costs associated with the Company's credit facility.
Quarterly operating expenses decreased by 4 percent between 1997 and 1996.
On a unit of production basis, second quarter expenses increased from $.63 per
EMcf in 1996 to $.64 per EMcf in 1997. Consistent with oil and gas revenue
increases, year to date operating expenses increased by 25 percent between 1996
and 1997. Expenses compared on a unit of production basis increased by 7
percent, or $.05 per EMcf. Operating expenses for the first six months of 1997
are $.68 per EMcf. (Oil is compared to natural gas in terms of equivalent
thousand cubic feet, "EMcf." One barrel of oil is the energy equivalent of six
Mcf of natural gas.)
General, administrative and other costs increased 3 percent between the
second quarters of 1996 and 1997, and increased 4 percent between the first six
months of 1997 and 1996. Due to certain economies of scale and full cost
accounting rules which provide for the capitalization of direct overhead related
to exploration and development activities, the Company was able to maintain
levels of administrative expense while managing a larger asset base. General,
administrative and other costs declined on a units of production basis from $.16
per EMcf for the first six months of 1996 to $.14 per EMcf for the first six
months of 1997.
-10-
<PAGE>
Interest expense before capitalization for the first six months of 1997 and
1996 was $734,000 and $646,000, respectively. Key capitalizes interest on
borrowings associated with undeveloped leasehold. The amounts capitalized for
the same periods were $413,000 and $320,000, respectively.
CASH FLOW AND LIQUIDITY
Liquidity refers to the ability of an enterprise to generate adequate
amounts of cash to satisfy its financial commitments. Key's primary needs for
cash are for payment of existing financing obligations and trade commitments
related to oil and gas operations. The Company's primary sources of liquidity
are cash flows from operating activities and debt financing. Management believes
that the overall sources of funds available to Key, including cash on hand, will
continue to be more than sufficient to satisfy the Company's financial
obligations.
Cash from operating activities reached $18.1 million for the first six
months of 1997, more than twice the $8.4 million reported for the same period
1996. Increases to net income, deferred taxes and DD&A added $3.3 million. The
remaining $6.4 million increase stems primarily from a decrease in revenue
receivables and an increase in accounts payable balances.
Cash expenditures for exploration and development reached $13.4 million for
the first six months of 1997. This is a 72 percent increase over the $7.8
million expended in the first six months of 1996. For the six months of 1997,
exploration and development expenditures amounted to 74 percent of cash from
operating activities.
Cash expended for the acquisition of oil and gas properties includes the
acquisition of non-producing acreage over 11 salt domes in west central
Mississippi.
Since year end 1996, long-term debt increased from $22.5 million to $24.0
million The Company borrowed a net $1.5 million against its credit facility to
finance the acquisition of undeveloped acreage in excess of cash generated by
operating activities. In the first six months of 1996, long-term debt increased
from $14.6 million to $21.2 million. Key drew on its own credit facility to
retire Brock debt and obtain more favorable financing terms.
The Company's ratio of current assets to current liabilities was 1.2 to 1
at June 30, 1997, a decrease from the 1.8 to 1 ratio calculated at December 31,
1996.
FUTURE TRENDS
The Company expects that cash on hand, net cash generated by operating
activities and amounts available under the credit facility will be adequate to
meet future liquidity needs under current corporate policies. Management
believes that the overall sources of funds available to Key will continue to be
sufficient to provide resources to meet the Company's exploration, development
and acquisition objectives.
Exploration expenditures for the first half of 1997 exceeded $17 million,
more than double the amount spent in the first half of 1996. The Mid-Continent
region continues to be the region with the most activity in terms of the number
of wells drilled. Also, the number of company-operated drilling wells in the
-11-
<PAGE>
Mid-Continent region increased significantly during the first half of the year.
Exploration activity in this region is expected to continue to increase.
Activities in the California region during the first half of 1997 have
focused on getting several projects to the drilling stage. As a result, drilling
activity in California is expected to increase significantly during the balance
of 1997. Due to the timing of this drilling, any wells that are successfully
completed probably would not significantly impact California gas production
before the fourth quarter of 1997.
Gulf Coast exploration efforts have been focused in the Mississippi Salt
Basin and in Vermillion Parish, Louisiana. The Company is conducting 3-D seismic
shoots in both of these areas. The 3-D seismic data is expected to yield several
prospects, although drilling in these areas is not expected to commence until
late 1997 or early 1998.
As discussed previously, compared to the first half of 1996, oil prices
were somewhat better and gas prices were significantly better in the first half
of this year. Although the price of both products is relatively strong at the
current time, it is impossible to predict future prices.
The Company continues to review merger and acquisition opportunities when
they become known. Potential acquisitions or mergers with the economic and
strategic attributes necessary to facilitate the profitable growth of the
Company will be actively pursued.
CAUTIONARY STATEMENT PURSUANT TO SAFE HARBOR PROVISION OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995
This report contains "forward-looking statements" within the meaning of the
federal securities laws. These forward-looking statements include, among others,
statements concerning the Company's outlook for the remainder of 1997 with
regard to production levels, price realizations, expenditures for exploration
and development, plans for funding operations and capital expenditures, and
other statements of expectations, beliefs, future plans and strategies,
anticipated events or trends and similar expressions concerning matters that are
not historical facts. The forward-looking statements in this report are subject
to risks and uncertainties that could cause actual results to differ materially
from those expressed in or implied by the statements.
These risks and uncertainties include, but are not limited to, fluctuations
in the price the Company receives for its oil and gas production, reductions in
the quantity of oil and gas sold due to decreased industry-wide demand and/or
curtailments in production from specific properties due to mechanical, marketing
or other problems, operating and capital expenditures that are either
significantly higher or lower than anticipated because the
-12-
<PAGE>
actual cost of identified projects varied from original estimates and/or from
the number of exploration and development opportunities being greater or fewer
than currently anticipated and increased financing costs due to a significant
increase in interest rates. These and other risks and uncertainties affecting
the Company are discussed in greater detail in this report and in other filings
by the Company with the Securities and Exchange Commission.
-13-
<PAGE>
PART II. - OTHER INFORMATION
----------------------------
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF THE SECURITY HOLDERS
- ----------------------------------------------------------------
On May 8, 1997 Company held its annual meeting of stockholders at which
Francis H. Merelli, Cortlandt S. Dietler and L. Paul Teague were elected as
directors.
The following are the number of votes cast on the election of directors.
<TABLE>
<CAPTION>
Directors: For Withhold Authority
- ---------- --- ------------------
<S> <C> <C>
Francis H. Merelli 9,108,650 458,142
Cortlandt S. Dietler 9,107,510 459,282
L. Paul Teague 9,109,536 457,256
</TABLE>
ITEM 5. OTHER INFORMATION
- --------------------------
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
(a) Exhibits:
27.1 Financial Data Schedule for Commercial and Industrial Companies
per Article 5 of the Regulation S-X for the quarter ended June
30, 1997.
(b) Reports on Form 8-K:
None.
-14-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: August 8, 1997
KEY PRODUCTION COMPANY, INC.
/s/ Monroe W. Robertson
------------------------------
Monroe W. Robertson
Senior Vice President and Secretary
(Principal Financial Officer)
/s/ Cathy L. Anderson
------------------------------
Cathy L. Anderson
Controller
(Principal Accounting Officer)
-15-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<CIK> 0000837290
<NAME> KEY PRODUCTION COMPANY, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> APR-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,419
<SECURITIES> 0
<RECEIVABLES> 6,006
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 10,796
<PP&E> 130,699
<DEPRECIATION> 34,881
<TOTAL-ASSETS> 107,717
<CURRENT-LIABILITIES> 9,091
<BONDS> 24,000
0
0
<COMMON> 2,943
<OTHER-SE> 56,998
<TOTAL-LIABILITY-AND-EQUITY> 107,717
<SALES> 9,421
<TOTAL-REVENUES> 9,516
<CGS> 5,358
<TOTAL-COSTS> 5,358
<OTHER-EXPENSES> 750
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 374
<INCOME-PRETAX> 3,295
<INCOME-TAX> 1,252
<INCOME-CONTINUING> 2,043
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,043
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
</TABLE>
